Judge orders release of alleged Bitcoin money launderer Razzlekhan on bail

Tech

On Monday, a judge ruled that Heather Morgan, also known as Razzlekhan, must be released on bail after she and her husband were arrested for allegedly helping to launder billions of dollars in stolen Bitcoin. Morgan and her husband Ilya “Dutch” Lichtenstein were already released on bail by another judge last week, but the government was given an emergency shutdown on the previous order, saying the couple could potentially recover millions of dollars in unseized Bitcoin. use to the country.

Monday’s hearing took place to review the release order and consider further prosecution and defense evidence. Below you can read both written arguments, which largely reflect what the parties argued in court. The presiding judge decided that Morgan could await her trial at home if she was released on bail, but she did not reverse the stay for Lichtenstein, meaning he would remain in custody.

The pair were arrested on charges of trying to launder some of the 119,754 Bitcoins stolen in the 2016 Bitfinex hack, while the government confiscated most of that cryptocurrency (around $3.6 billion last week). ), she claims in court documents that there are still millions of dollars that she has not yet been able to get her hands on. It also states that the couple bought 70 gold coins with money related to the attack, which it did not find while searching the couple’s apartment (it did discover empty hollowed-out books, a bag of burner phones, and various hardware cryptocurrency wallets).

After her arrest, Morgan gained a lot of attention on social media after it was discovered that she had posted rap music, videos and fashion content under the name Razzlekhan. Clips of particularly chilling moments from her music videos have been shared online since the news of her arrest, alongside disbelieving comments that the person who raps about being the “crocodile of Wall Street” was involved in the Bitfinex hack.

During Monday’s hearing, the government argued that Morgan and Lichtenstein could use the unseized money or gold to escape to a country that wouldn’t really be willing to extradite them, such as Russia or Ukraine (Lichtenstein was born in Russia and renewed his passport in 2019, according to the government). It also argued that they would be motivated to do so as they could face significant financial penalties and 25 years in prison if convicted of fraud and money laundering.

The couple’s lawyer claimed they were unlikely to flee for a variety of reasons – Morgan is currently recovering from surgery and both she and Lichtenstein’s parents had posted their home as collateral for their bail. He also argued that if they had wanted to flee, they would have done so in the week or two prior to the arrest, and claimed they would have realized the government caught on to them after they received a subpoena from an ISP. and see the seized money. The prosecution responded by saying it was highly unlikely that the couple realized how much evidence the government had until they were arrested, as much of it had been obtained by cracking encrypted files that Lichtenstein had stored on a cloud service.

The judge said Lichtenstein would not get bail because government evidence claims he was largely in control of the funds — Morgan, she argued, was less likely to have access to funds that would help her escape. She said Morgan would be required to abide by the conditions set forth in the original release order, which include house arrest, a location monitoring ankle bracelet, restrictions on computer use and a ban on conducting cryptocurrency transactions.

The Argument Why Lichtenstein And Morgan Should Be Released On Bail Prepared By Their Lawyers

The Government’s Argument Why Lichtenstein and Morgan Shouldn’t Get Bail

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